We're Not Struggling as Much as You Think

According to a New York Times blog post, titled "Many Young Adults Still Struggle with Health Care Costs, Report Finds" by Ann Carrns yesterday, “Despite recent gains in offering health coverage to young adults, many still do not have coverage and have had to make tradeoffs because of medical costs.”  How terrible.

People make tradeoffs every day because of costs.   In fact, if there were no costs, there would be no reason to make tradeoffs.  But there are always costs – it’s just a question of whether those costs are seen or unseen, how much those costs are, and who bears the cost.  Tradeoff decisions do not imply that something costs “too much” – it just means that other things provide more value to us. 

Young adults as a group make tradeoffs about health care because they are generally healthy.  There should be little surprise that young adults estimate their health risk to be lower than the general population.  This means their cost of foregoing healthcare is less than an older or less healthy adult. When choosing among health plans, they frequently pick the lower cost options, choosing to spend their money on things that hold more value to them now.  Over time, their health care choices shift as well, and they may opt for additional coverage to match a higher likelihood of increased doctor visits as they age. 

I have made tradeoffs because of medical costs as well – when I determine how much health coverage I want for the year, I am making a guess as to what my risk of a major medical issue will be this year.  Of anyone, I am probably the best qualified to make this decision.  I know if I smoke, if I drive recklessly, if I get enough sleep, if I eat healthy food, if I plan to have children, if I plan to take up extreme sports, or if I’m genetically predisposed to health problems.  I also know what level of risk I am willing to absorb, and what I prefer to budget on healthcare versus what I prefer to budget on vacations, clothing, housing, or investments.  It doesn’t matter if I make $10,000 or $100,000; I have to make tradeoffs because my wants are boundless, but my resources are finite. 

The statistics in this article, at first glance, seem overwhelming. 

“About 39 percent of young adults age 19 to 29 -- or about 18 million people -- went without health insurance for at least part of 2011, the report found, and more than a third had medical bill problems or were paying off medical debt.

Of those with medical bills or debt, 43 percent said they had used all of their savings, and a third said they had delayed educational plans as a result. Of those who were paying off accumulated medical debt, a quarter said their debt was $4,000 or more."

Of course, these are written to make it sound like a large percentage of the populace is facing exorbitant medical expenses and struggling to survive.  Let’s look at these statistics a little bit more clearly. 

The “43 percent” of those who had medical bills or debt and claimed they had used all of their savings (I won’t go into the various ways that people define ‘savings’) account for 14% of the population of young adults surveyed, or 2.5 million people.  Of those, the 1.8 million who said they delayed educational plans a result likely did not do so purely because of cost – a medical issue, even if you are a millionaire, is a legitimate reason to delay education.  Additionally, did they delay undergraduate education?  Did they delay their MBA?  Now for the “quarter who said their debt was $4000 or more” – this sounds like a staggering number of people – but here were are talking about only 3.5% of the population, an estimated 630,000 young adults.  (Remember, the survey only covered 1,863 participants, and the reported margin of error for the study was plus or minus 3 percentage points.)

Let’s reverse the statistic: of all young adults, aged 19 – 29, 96.5 percent have less than $4000 in medical expenses, and 66 percent report having zero medical debt.  Wow, we’re not doing so badly, are we?